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You can sometimes retire before age 65 if you smartly plan your health coverage and income — but 2026 brings important changes to ACA marketplace subsidies you need to understand.
For many early retirees with $500,000–$5 million in investable assets, avoiding surprise medical costs is essential to making a retirement plan work.

How ACA Premium Tax Credits Work (2026)

In 2026, the Affordable Care Act (ACA) still offers Premium Tax Credits (PTCs) to help reduce the cost of health insurance — but the enhanced subsidies that made them extremely generous during 2021-2025 have expired.
Under the basic ACA rules:

Premium tax credits are available for households with incomes between 100% and 400% of the Federal Poverty Level (FPL), adjusted for household size.
For 2026 coverage (based on 2025 poverty guidelines), the 100–400% FPL income ranges are approximately:

Household Size	100% FPL	400% FPL
1 person	$15,650	$62,600
2 people	$21,150	$84,600
3 people	$26,650	$106,600
4 people	$32,150	$128,600

The Premium tax credits are based on a sliding scale of expected premium contributions as a percentage of income. The lower your income, the higher your credit.

Important change for 2026:
The enhanced subsidies that lowered required contributions and removed the 400% income eligibility cap expired on December 31, 2025. This means ACA premiums are generally less subsidized in 2026 than they were in 2021-2025, and many early retirees who expected very low premiums are seeing higher premiums in 2026.

What the Subsidy Changes Mean in Practice

Higher Premiums Unless Expected Income Is Low

The enhanced tax credits made ACA plans very affordable in recent years, sometimes resulting in zero premiums for middle-income households. Those enhancements are no longer in effect for 2026 coverage unless Congress renews them.

Without enhancements, a household above 400% of FPL (~$84,600 for two people) typically does not qualify at all for premium tax credits. This means early retirees who once qualified for substantial subsidies may now face steeper costs in 2026 — a factor you must include in retirement income planning.

How ACA Coverage Can Still Support Early Retirement

Even with subsidy changes, the ACA can be part of an early retirement transition if you strategically manage your income until after the year you turn 65. Even though the credits end the month you turn 65 and enroll in Medicare, the PTCs are based on your full year household income.

1. Control Your Modified Adjusted Gross Income (MAGI)

Premium Tax Credits are based on MAGI. To maximize your credit, you have to minimize your MAGI. What counts towards your MAGI?

Income from wages, Social Security, and pensions
Interest and Capital Gains
IRA and 401(k) Distributions
Roth Conversions

What does not count towards your MAGI? Where can you access money for expenses?

Roth IRA and Roth 401(k) Distributions are non-taxable
You can use Health Savings Account (HSA) withdrawals to pay for deductibles and out of pocket expenses. It’s a great idea to build up an HSA in advance of retirement. You cannot, however, use an HSA to pay for insurance premiums, except while you are receiving unemployment benefits.
Build up cash reserves in a taxable account to avoid taking taxable distributions or starting SS or Pensions.

2. Delay Higher Income Events Where Possible

If possible:

Postpone Social Security until benefits are higher later
Delay large Traditional IRA withdrawals until after age 65
Manage capital gains timing

These steps may keep you within ACA income eligibility in the early years of retirement. It is important, however, that your income is not Zero – if your income is below 100% of the Poverty Level, you are eligible for Medicaid, but not a Premium Tax Credit.

Beware of Premium Increases

According to recent estimates, ACA marketplace premiums could climb substantially in 2026 as insurers adjust to the expiration of enhanced credits, with some plans more than doubling in net cost for enrollees who no longer receive enhanced subsidies.

What This Means for Early Retirement Planning

You should never assume ACA coverage will be inexpensive without modeling the impacts of subsidy changes, premium costs, and your projected income.
A retirement plan that works on paper without considering healthcare costs may fall short if ACA premiums rise faster than expected.

Because healthcare costs can be a substantial expense, many early retirees integrate ACA planning with:

Roth conversion strategies
Tax-efficient retirement income sequencing
Social Security optimization
Medicare transition timing
Long-term care planning

This holistic view ensures you’re not derailed by unexpected healthcare expenses. Early retirement income planning requires careful coordination between healthcare subsidies, taxes, and withdrawals.

How a Fiduciary Advisor Helps

At Good Life Wealth Management, we integrate ACA health cost planning into your broader retirement strategy. That means:

Considering ACA premiums based on your projected MAGI
Incorporating subsidy eligibility changes under current law
Coordinating retirement income sources with health coverage needs

We work with pre-retirees and retirees with $500,000–$5 million, nationwide and remotely, so you can build a plan that realistically supports early retirement. You might also find our Who We Help and Questions to Ask a Financial Advisor pages helpful if you’re evaluating guidance options.

Frequently Asked Questions

Can I still get ACA subsidies if I retire before age 65?
Yes — if your income falls between 100% and 400% of the Federal Poverty Level, you can still qualify for premium tax credits under the ACA in 2026, though benefits may be smaller than they were with enhanced subsidies.

What counts as income for ACA eligibility?
Income for ACA subsidies is your modified adjusted gross income (MAGI) — including traditional IRA/401(k) distributions, but excluding Roth IRA withdrawals if qualified and certain other tax-free sources. Good Life Wealth Management

A lot of people want to retire early. Maybe you’re one of them. The biggest obstacle for many is the skyrocketing cost of health insurance. It’s such a huge expense that some assume they have no choice but to keep working until age 65 when they become eligible for Medicare.

However, if you can carefully plan out your retirement income, you may be eligible for a Premium Tax Credit (PTC). What’s the PTC? It’s a tax credit for buying an insurance plan on the health exchange, under the Affordable Care Act (“Obamacare”). The key is to know what the income levels are and what counts as income. Then, use other savings or income until after the year in which you reach age 65 and enroll in Medicare. If we can bridge those years, maybe you can retire early by having the PTC cover a significant portion of your insurance premiums.

ACA Income Levels

You are eligible for a PTC if your income is between 100% and 400% of the Federal Poverty levels. For a single person, those income amounts are between $12,140 and $48,560 for 2019. For a married couple, your income would need to be between $16,460 and $65,840. The lower your income, the larger your tax credit. Please note that if you are married filing separately, you are not eligible for the PTC. You must file a joint return.

The PTC will be based on your estimate of your 2020 income. If your actual income ends up being higher, you have to repay the difference. So it is very important that you understand how “income” is calculated for the PTC.

Under the ACA, income is your “Modified Adjusted Gross Income” (MAGI). Unfortunately, MAGI is not a line on your tax return. MAGI takes your Adjusted Gross Income and adds back items such as 100% of your Social Security benefits (which might have been 50% or 85% taxable), Capital Gains, and even tax-free municipal bond interest.

Premium Tax Credit

Here are some examples of the Premium Tax Credit, based on Dallas County, Texas, for non-tobacco users:

Single Male, age 63 with $45,000 income would be eligible for a PTC of $580 a month
Single Male, age 63 with $25,000 income, PTC increases to $811 a month.
Married couple (MF) age 63, with $60,000 income would have a PTC of $1,404/month
Married couple (MF) age 63, with $40,000 income would have a PTC of $1,633/month

(Same sex couples are eligible for a PTC under the same rules. They must be legally married and file a joint tax return.)

For this last example of a 63 year old couple making $40,000, the average cost of a plan after the Premium Tax Credit would be $332 (Bronze), $428 (Silver), or $495 (Gold) a month, for Dallas County. That’s very reasonable compared to a regular individual plan off the exchange, or COBRA.

Check your own rates and PTC estimate on Healthcare.gov

Understand ACA Income

Here’s how you can minimize your income to maximize your ACA tax credit and retire before 65:

Don’t start Social Security or a Pension until at least the year after you turn 65. If you start taking $2,000 a month in income, it means you could lose a $1,400 monthly tax credit.
Don’t take withdrawals from your Traditional IRA or 401(k). Those distributions count as ordinary income.
You can however take distributions from your Roth IRA and that won’t count as income for the PTC. Just make sure you are age 59 1/2 and have had a Roth open for at least five years.
Build up your savings so you can pay your living expenses for these bridge years until age 65.
If you have investments with large capital gains, sell a year before you sign up for the ACA health plan. Although you might pay 15% long-term capital gains tax, you can avoid having those sales count as MAGI in the year you want a PTC.
In your taxable account, sell funds or bonds with low taxable gains in the years you need the PTC. That can be a source of liquidity. Rebalance in your IRA to avoid creating additional gains.
You can pay or reimburse yourself from a Health Savings Account (HSA) for your qualified medical expenses. Those are tax-free distributions.
If you still have earned income when “retired”, a Traditional IRA (if deductible) or a 401(k) contribution will reduce MAGI.
If you sell your home (your primary residence), and have lived there at least two of the past five years, then the capital gain (of up to $250,000 single or $500,000 married) is not counted towards MAGI for the ACA.

Minimum Income for the ACA

An important point: your goal is not to reduce your income to zero. If you do not have income of at least 100% of the poverty level, you are ineligible for the PTC. Instead, you will be covered by Medicaid. That’s not necessarily bad, but to get a large tax credit and use a plan from the exchange, you need to have income of at least $12,140 (single) or $16,460 (married).

Retire Early with the ACA

If you can delay your retirement income until after 65, you may be eligible for the Premium Tax Credit. This planning could add years to your retirement and avoid having to wait any longer. If you want to retire before 65, let’s look at your expenses and accounts. We can create a budget and plan to make it happen using the Premium Tax Credit.

Consider, too, that the plans on the exchange may have different deductibles and co-pays than your current employer coverage. Check if your existing doctors and medications will be covered in-network. Create an estimate of what you might pay out-of-pocket as well as what your maximum out-of-pocket costs would be.

Good Life Wealth is here to be your guide and partner to make early retirement happen. We are a fiduciary planning firm, offering independent advice to help you achieve the Good Life. Email Scott@goodlifewealth.com to learn more.

Can You Use the ACA to Retire Early in 2026?